As a key field of economic operation and a clean modern service industry

the financial industry will play an important role in promoting and safeguarding the development of green economy in China. Based on the data of urban panel in China

this article uses fixed effect model

panel threshold model and simultaneous equations to test the impact of financial development on urban environmental pollution and its mechanism. Considering the impact of financial decentralization on financial development and financial efficiency

this article further studies the financial emission reduction effect under the financial decentralization system. It is found that financial development has the effect of emission reduction

and with the expansion of the financial scale

the inhibition of financial industry on urban environmental pollution demonstrates the characteristic of diminishing marginal effect. There is a threshold effect in the inhibition of urban pollutant emissions by financial development based on financial decentralization. A higher level of financial decentralization is conducive to giving full play to the local information advantages of local governments and financial institutions

and enhancing the emission reduction effect of financial development. In addition

research on the mechanism of action finds that financial development can indirectly inhibit urban pollutant emissions by promoting urban green technology innovation. Therefore

on the one hand

the financial industry should play an important role in the development of green economy and the green financial system should be improved. On the other hand

reform of the financial decentralization system should be deepened to give full play to the local governments and local financial departments in promoting green technology innovation and environmental pollution control.